More Barriers for Medicare Advantage

President Obama proposes slashing taxpayer subsidies of Medicare Advantage in order to fund health coverage for uninsured Americans. Insurance companies make a lot of money selling Medicare Advantage.
Nearly 1 in 5 people eligible for Medicare in this country have bought a version of Medicare Advantage, the ratio in Minnesota and otherstates is 1 in 3. Insurance agents tell customers buying a Medicare Advantage policy gives them more coverage for no extra money.

That’s true. In fact among the hundreds of versions for sale there are Medicare Advantage insurance policies that are more efficient in Medicare care delivery than traditional Medicare. However, some are not, according to Paul Precht with the Medicare Rights Center, an advocacy group in New York City. Taxpayers are footing the bill for the inefficient plans, he says.

“If you join a Medicare Advantage plan and are getting additional benefits and you are not paying the premium that’s because the government is paying the premium directly to the plan through a subsidy,” he says. Edwin Park, co-author of a new study for the Center on Budget and Policy Priorities in Washington, D. C. says the subsidy is about $1,000 per Medicare Advantage policy holder. “It costs more to cover a beneficiary in Medicare Advantage than it does in traditional Medicare,” he says.

President Obama proposed cutting Medicare Advantage payments to insurance companies last week in his proposed budget. His plan would transfer funding from to pay for his health care proposals.

Robert Zirkelbach, the spokesman for America’s Health Insurance Plans, an insurance trade group, says the companies don’t like the idea. “This proposal asks seniors and Medicare Advantage to fund a disproportionate share of the cost to reform the health care system. Thirty percent of the new costs for this health care reform would come out of the Medicare Advantage program,” he says.

Actually, what Zirkelbach describes as, “the cost,” would be born by the insurance companies themselves. They’d lose some of their profit, the money that comes from the taxpayer subsidy of Medicare Advantage policies.

As early as the l980’s and then with a big increase in subsidies during the just ended Bush administration, Medicare Advantage was viewed as a more efficient private sector alternative to the government’s Medicare program. The opposite appears to be true.

The Government Accountability Office reports taxpayers have spent billions in subsidies for Medicare Advantage with more than half the money going to insurance companies as profits. The profits invite abuses. Unfortunately, this is just another area where abuses and extreme efforts on both sides of the asile are essential in an effort to fix yet more healthcare and financial problems leftover for decades.

There are hundreds of Medicare Advantage products in the market place. Some appear to be good deals but the terms are not easy to understand and they change often. Hopefuly, things will change as far as how the plans work and it is extremely important that Congress make sure that the language used to explain Medicare and Medicare Advantage is actually able to understand by those who need to choose a plan.